Sunday, September 6, 2009

The New York Times' Dick Stevenson, who if I remember right used to be their main Social Security reporter, looks at similarities between President Obama's push for health care reform to President Bush's 2005 push for Social Security reform, in particular personal accounts. Stevenson argues that Bush's personal accounts lied out of most Americans' ideological comfort zone and says that prospects for Obama's health reform depend on whether Americans feel the same about the public option and other ideas Obama has put forward.

I'm not sure I agree with Stevenson: at the time, we paid a bigger political price for benefit cuts, which were part of a plan to restore Social Security to solvency and would be needed regardless of whether reform included personal accounts. Moreover, support for accounts didn't change that much over the course of the debate: going into it, a bit over half of Americans supported accounts, in the midst of reform a bit less than half did, and today I believe it's gone back up to a little over half again, depending on how the question is asked. Cutting benefits, by contrast, isn't popular, although I believe (from a June 2005 New York Times poll) that 'progressive indexing' was about the most popular way to do it. Raising the payroll tax ceiling was more popular, but would solve less of the shortfall.

Similarly, while many on the center/right are worried about excessive government control over health care markets, which includes the so-called public option, what may be the killer for Obama's health proposal is simply seniors upset about their Medicare benefits being cut. Obama might have been able to overcome the more generalized unease of the center/right but tacking on seniors angry about potential benefit cuts could be the killer.

In both the case of Social Security reform and health care reform, what the press thinks is the biggest issue – personal accounts and the public option – may turn out to be less important for the plans' political success than more mundane dollars-and-cents issues of taxes and benefits.

1 comment:

Social Security crisis was sold to workers as a crisis of benefits after Trust Fund Depletion; Social Security goes "bankrupt" or "flat broke" and bad things happen. Where for opponents the assumption was that the program was always unsustainable over the long haul and could only be 'saved' by continually edging up payroll tax and/or tax transfers. These two versions of crisis, one that saw it as sustainability of benefits, and the other that saw it as one of sustainability of revenues were fundamentally irreconcilable. All of which led to the pretzel logic underlying CSSS which asserted that you could have it all: the magic of private markets could deliver you a secure retirement AND an inheritable 'ownership society' interest better than the unsustainable structure of traditional Social Security. All of which left little room for the semi-bitter medicine of 'sustainable solvency'.

The problem for the right is that they got their green eye-shade fiscal responsibility side mixed with their rose glass views of the magic of free market capitalism and in Social Security 'reform' delivered a muddled shade of gray that satisfied no one.

About me

I am a Resident Scholar at the American Enterprise Institute in Washington, where my work focuses on Social Security policy. Previously I held several positions within the Social Security Administration, including Deputy Commissioner for Policy and principal Deputy Commissioner. Prior to that I was a Social Security Analyst at the Cato Institute. In 2005 I worked on Social Security reform at the White House National Economic Council, and in 2001 I was on the staff of the President's Commission to Strengthen Social Security. My Bachelor's degree is from the Queen's University of Belfast, Northern Ireland. I have Master's degrees from Cambridge University and the University of London and a Ph.D. from the London School of Economics and Political Science. I can be contacted at andrew.biggs @ aei.org.